Ecosystem Accounting: Goodbye GDP?

On March 11th 2021, the United Nations adopted a new framework, the System of Environmental-Economic Accounting – Ecosystem Accounting (SEEA EA), but what does it mean and does it signal the end for GDP as a tool for tracking individual and environmental well-being?

Since World War II one of the most commonly used statistics to measure economic health has been a country’s Gross Domestic Product (GDP). For a long time however, the use of this statistic has been criticised as outdated and no longer fit for purpose. One reason for this is that GDP does little in reflecting “the dependency of the economy on nature, nor its impacts on nature, such as the deterioration of water quality or the loss of a forest.” This is something that ecosystem accounting and the SEEA EA looks to address.

Ecosystem accounting involves a connected framework to help organise data that relates to habitats and landscapes, measures ecosystem services, tracks changes in ecosystem assets and then links this information to human cultural, economic, social and political activity. The new framework uses this at its core and is built upon five ‘ecosystem accounts’:

  • Ecosystem Extent
  • Ecosystem Condition
  • Ecosystem Service (Physical)
  • Ecosystem Service (Monetary)
  • Monetary Ecosystem Asset

The first account, Ecosystem Extent, notes the total area of specific ecosystems within a specified area and tracks changes to this over a time period. The second, Ecosystem Condition, records the ongoing condition of aspects within each ecosystem building up a traceable picture over time of the health of the ecosystem. The third and fourth account, Ecosystem Service, record the physical and monetary service supply that each ecosystem provides while the fifth and final account, Monetary Ecosystem Asset, records and tracks degradation and enhancement of ecosystems over the same period. A spatial approach is used when identifying assets throughout the process as their location can impact both positively and negatively on local populations but there is no limit on the space analysed which can be as large as a nation or as small as a urban area.

This importance of using this framework over the traditional GDP indicator is that it helps to answer questions “on the relationship between the economy, society, and the environment and how we measure well-being and social progress.” It has already been used in Indonesia, South Africa and Uganda and is a step forward as the world looks to tackle the ever-worrying impact of climate crisis that continues to be impacted by poor economic-based decisions.

The adoption of the SEEA EA has been welcomed by campaigners, including CHEC, who for a long time have been asking countries to go #BeyondGDP. It also is a promising development in a year that many see as pivotal for the future of a healthy environment with both COP15 on Biodiversity and the COP26 Climate Conference approaching fast. Time will tell whether the impact of the SEEA EA will have the desired effect but it is a step in the right direction. It starts to rightly elevate the importance of the wellbeing of individuals and the environment which is imperative in a world that has been dominated by the economy for so long.

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